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Boulder leaders: Tuesday's vote just the beginning of municipalization process

Multiyear process could end in no new utility

By Laura Snider Camera Staff Writer

Posted:
11/02/2011 06:16:10 PM MDT

Updated:
11/02/2011 06:28:02 PM MDT

Ballot Issue 2B

Yes 13,137, 50.3%

No12,996, 49.7%

Ballot Question 2C

Yes 13,555, 51.8%

No12,622, 48.2%

Narrow voter approval of two ballot issues that will allow the city of Boulder to break from Xcel Energy and create a municipal utility is just the beginning of a process that could take three to five years to complete, city officials said Wednesday.

And in the end, the city may still choose not to form a municipal utility at all, Boulder leaders said at a news conference.

"The vote last night was a step in the process and not the end of the process," said David Driskell, Boulder's executive director of community planning and sustainability.

At press time Tuesday night, it appeared that voters were approving Question 2C, which gives the city authority to create a municipal utility, and turning down Issue 2B, a companion tax that would be used to pay for the legal bills and consultants' fees that the city will incur on the way to starting such a utility. But the final vote count, posted at about 1 a.m. Wednesday, showed both measures passing with small margins.

However, the Boulder County Clerk and Recorder's Office has another 215 ballots that are yet to be counted, including overseas and military ballots that have been received but not counted and ballots with signature or ID issues that have now been fixed. And the Clerk and Recorder's Office estimates that another 907 ballots could theoretically still come in, including ballots from overseas military personnel that have eight additional days, by law, to return their ballots.

Before the City Council can make a final decision about whether to actually start a municipal utility, two key costs have to be resolved: the amount of money the city will have to spend to buy Xcel's local distribution system (including poles, wires and substations) and the amount of money the city may owe Xcel for its "stranded costs," or investments Xcel may have made in anticipation of serving Boulder in the future.

Boulder has the legal authority to acquire Xcel's local distribution system by condemning the infrastructure and paying Xcel "just compensation" as determined through the courts. But Colorado law requires that the city first try to come to a negotiated settlement with Xcel over costs before the city files condemnation proceedings in court, according to City Attorney Tom Carr.

"The hope is that we can negotiate a good price with Xcel," he said. "We don't know how cooperative they will be. We hope not to have to file a condemnation action."

The negotiation starts with Boulder making a good faith offer for what the city believes the system is worth, and Colorado state law includes mechanisms for financially penalizing the city for low-balling the offer and for penalizing Xcel if the utility doesn't accept a fair price.

"It's structured to try and make people resolve this outside of court," Carr said.

To determine the possible stranded costs that the city might owe Xcel requires a second legal process. The Federal Energy Regulatory Commission also requires that the parties attempt to negotiate by first exchanging letters that document what each party believes the stranded costs to be.

"We've already had the exchange of letters with Xcel; we've started the negotiation," Carr said.

The city maintains that Boulder should not be on the hook for any stranded costs, while Xcel argues that the city could owe the company $335 million.

Over the coming weeks, the City Council will hold two meetings that are related to what comes next in the municipalization process. On Nov. 15, the City Council will discuss how to levy the new tax outlined in Issue 2B, which may be increased up to $1.9 million annually for five years. And on Dec. 6, the City Council will hold a roundtable to generally discuss the city's next steps.

City Manager Jane Brautigam said that the city hopes to engage residents who were on both sides of municipalization as Boulder moves forward.

"We had supporters and detractors of issues 2B and 2C," Brautigam said. "All of them really contributed to a public discussion that was robust and which created a situation that all of the voters in the city had a lot more information about municipalization than ever before."

Brautigam also said the city was committed to making all future decisions about municipalization in a "deliberate, measured and inclusive way" that takes into account differences of opinion.

In the immediate future, Boulder residents shouldn't expect any changes in their service from Xcel, utility officials said Wednesday. But Xcel reiterated that the utility would consider asking the Colorado Public Utilities Commission for permission to exclude Boulder customers from some of its voluntary programs, including Solar Rewards and other energy efficiency initiatives.

"We do not want to invest in programs or resources that will not be useful to our statewide system and other customers if we no longer serve Boulder," Xcel spokeswoman Michelle Aguayo said in an email. "We have an obligation to the rest of our Colorado customers to assure we obtain the fair value of all of the assets. They should not be burdened by Boulder's decision."

Last month, city attorneys said that they did not believe it was legal for Xcel to discriminate against Boulder residents, who help pay for the utility's voluntary programs through riders on their bills.

Aguayo -- who noted that Xcel was "disappointed in the outcome" of the vote -- also said Wednesday that the company maintains that it can serve Boulder customers better than the city can through a municipal utility.

"We remain skeptical that Boulder will be able to meet the terms of the initiative and match our rates, let alone match the level of renewables we provide," she said.

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